GMM PFAUDLER:

GMM Pfaudler Limited is one of the few companies that has come out relatively unscathed from the Covid-19 pandemic.

The company operates in the niche market of critical engineered equipment and systems, and predominantly caters to the booming Chemical and Pharmaceutical industries of India.

The company was established as GMM in 1962. In 1987, they established a Joint Venture with Pfaudler Inc USA, which was the world leader in Glass Lined Equipment (GLE). By 1999, Pfaudler Inc had acquired a majority stake in the Joint Venture, and the company was renamed to GMM Pfaudler Ltd.

**In 2014, it became a part of Deutsche Beteiligungs AG

It is primarily engaged in the manufacturing of Glass Lined Equipment which is a critical engineered component used in the Chemical and Pharmaceutical industries due to its corrosion resistant properties.

Backed by the strong technology and research support of Pfaudler Inc, the company has established itself as a highly reputed and trustworthy player in the GLE segment, boasting a market share of over 50%. The partnership between GMM Pfaudler and Pfaudler Global has opened the doors to newer geographies such as Europe, Middle East, and Americas.

Identifying the cyclicality of the GLE business, the company has set about diversifying their interests through acquisitions as well as proprietary products.

In 2008, the company acquired MAVAG AG which is a supplier of highly engineered Filtration and Drying Equipment, and Mixing Systems which are used in critical applications in the Chemical, Pharmaceutical, and Bio tech industries, thereby gaining a foothold in a high entry barrier business.

The Industrial and Mixing Solutions Division (IMDS) of Sudarshan Chemicals was acquired in 2019. This acquisition led to ‘Mixion’, the company’s Mixing Systems Business Division, establishing itself as the market leader in the Industrial Mixing space.

The company had been looking to set up a strategic manufacturing plant in Hyderabad (a major Pharma Hub) to cater to the needs of the thriving Pharma industry there with utmost efficiency.

Instead of having to set up an entirely new plant, they were able to acquire a near ready-made GLE manufacturing capacity from De Dietrich. This acquisition is widely expected to boost the company’s presence in these high demand areas.

Furthermore, their Heavy Engineering business, which had been a laggard for some time, has now started burgeoning! This business segment is helping the company enter new industry segments such as Petrochemicals, Fertilizers, and Oil and Gas.

The company largely operates in India and has three manufacturing plants.

Over the years, the company has maintained a balance between organic and inorganic growth incredibly well. Their acquisition behavior points towards one of prudence. They seem to acquire strategic companies operating in niche and high entry barrier segments; these qualities allow them to keep cutthroat competition at bay. It is also likely that being a critical equipment supplier, customer switching costs (customer stickiness) could potentially be quite high.

It is my belief that these qualities augur well for the company and have enabled its growth without compromising on the resilience of the business model and should help them in cementing their leadership position.

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